What All Employers Need to Know About Wage Class Actions

What are wage and hour class action lawsuits? When employees feel they haven’t been paid properly or their employers have otherwise violated labor laws, employees file these lawsuits to seek fair compensation and due process. In these cases, most allege their employers broke guidelines set by the Fair Labor Standards Act, or FLSA.

Who Pursues These Class Action Suits?

In this situation, a group of workers who’ve suffered similarly due to their mutual employer’s violation of labor laws file wage and hours class action lawsuits against the employer. Generally, their employers violate FLSA standards, such as withholding overtime pay. In fact, most suits are brought under these federal guidelines. For example, two plaintiffs may file a class action suit on behalf of 1,000 employees because of the employer’s failure to adequately compensate for overtime. Together, they can justify the costs of the legal proceedings and possibly reap a better settlement for all plaintiffs.

Common Claims in Wage and Hour Lawsuits

Wage and hour lawsuits can focus on a variety of issues and labor violations, but these are most common violations of FLSA guidelines:

• Failure to meet minimum wage requirements

• Failure to pay time and a half when employees exceed 40 hours a week

• Employees working without pay and off the clock

While these are the most common federal violations, many wage and hour suits are filed based on violations on state law. For example, California has a higher instance of these cases due to mandates concerning the following:

• Higher minimum wage

• Overtime pay for shifts exceeding 8 hours

• Required breaks

Filing Wage and Hour Class Actions

The FLSA lays out specific procedures for the creation of a “collective action” or class action lawsuit, which differs somewhat from the usual class action filing. First, the employee who has fallen victim to labor violations must determine if it is an isolated incident. If other former and/or current staff members have had similar experiences, the employee will file and the courts will generally allow conditional certification. Plaintiffs must then contact possible class members, who must opt-in for the action. In some cases, the courts will order the company to facilitate this via post notices and the submission of contact details for current and former employees.

Settlements, Relief and Trials

The most common charge in wage and hour class actions is some form of unpaid wages. Naturally, payment for back wages is the most common settlement element. However, injunctive relief, which deals with unannounced changes in policies, is also frequent. Many employers choose to settle these cases over taking them to trial. Trials can lead to larger payouts for the company in addition to extended and very public news coverage. When the final judgment or settlement is made, attorney’s fees are paid and the remaining sum is divided among class action members according to the harmed each suffered.

Ethical and Fair Employee Management Practices

The best way to avoid these lawsuits is to take an ethical approach to employee management. Additionally, you should familiarize yourself with FLSA and state labor regulations so you aren’t caught unaware. Here are four tips to help you guide your management style:

• Provide employees with a handbook: Have a clear code of conduct that is always easily accessible. Include it in your training materials.

• Provide clear communication for all policy changes: As your company grows, your labor policies may have to change to match legal guidelines. Let everyone know in advance.If you run a small business, your biggest liabilities are your changing work policies as your company thrives and expands. Keep everyone updated on your labor policies and adjust your company infrastructure to comply with any federal regulations your enterprise grows into.

The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.